Mr. Now says real estate cycles typically move in 10-year swings.
Rising to 1987, then flat for 10 years.
Rising into 2007.
You have plenty of time and as the renter you have the power now. You can negotiate incredible rent deals now, planning for a late 2008- early 2009 entry at the earliest. You might be able to rent very cheaply for many years (well past 2009) as you observe how the drama is unfolding in real estate and the economy. If you held real estate now and bought it over the past 2-3 years, how are you feeling now? Since you cannot sell at a profit, you are renting the place and competing with others in the same boat. Use your leverage as a tenant. You can rent for less than the landlord's expenses. If you cover 90% of his nut he is happy right now. He thinks: Better this clean-looking, nice tenant at 90% of cost than bleeding monthly into the wallet of the insurance company, the bank and local contractors doing maintenance.
We are in the middle of what looks like the biggest meltdown of paper assets ever. Consider getting keen about this. This is a unique and dicey time-- with alot of opportunity if you see clearly. Useful links appear below.
You are entering the economy as a player for the first time. Before this, you have nothing to worry about since you have nothing. Now you are building up. You might want to get smart about real estate cycles, and safe places to store your savings until you act. You might want to take this time to learn everything about the target market you are aiming at. You might want to look at dozens of homes and make 25%-off offers to practice the process. 99% of the time it comes back with no counter offer. 1% of the time you find a weak seller. Either way you win.
Mr. Now says you might want to relax and take advantage of the time you have to decide. Play your cards right, and you can find an incredible rent, save tons of money over the next 2-4 years, make a return on that, and pay down debt, and make a magnificently timed lowball offer on exactly the right house at exactly the right moment.
In real estate, timing is everything. Those who got in in 1997 and sold in 2005-2007 are very happy now. The transactions costs are prohibitive and the instrument is not liquid. For these reasons, you must hold for years. That means you must time your purchase to the cycle.
The larger picture includes a possible once-in-a-lifetime credit derivative explosion. This is the situation you are entering. This is a big deal. It is complicated and you might want to get smart about this. The Sinclair web site (below) has excellent content on these topics.
See also:
http://en.wikipedia.org/wiki/Credit_derivative
http://en.wikipedia.org/wiki/Credit_default_swap
http://en.wikipedia.org/wiki/Collate...ebt_obligation
Sinclair's Analysis of Now
(....note the date, Sept 2006)
www.jsmineset.com
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